Bitcoin is Coming to Houston
Put away the credit card, You might pay your next bar tab with only your phone.
Texas bars and restaurants are now allowed to accept Bitcoin as payment for alcoholic drinks after a recent decision by the Texas Alcoholic Beverage Commission.
“The acceptance of digital currency such as Bitcoin from a consumer… is the establishment’s choice,” said Carolyn Beck, TABC director of communications and governmental relations.
This is great news to a small group of early adopters, entrepreneurs and tech geeks who are working to bring Bitcoin to Houston. If their plans go through, you won’t even need a wallet. Your money will stay on your phone.
What’s a Bitcoin?
Bitcoins are internet dollars, if you want to use layman’s terms. They’ve earned a wide following online since their introduction in 2009 for being fast, anonymous and plain cool.
Sheldon Weisfeld, CEO of a company operating Bitcoin ATMs, showed me how they work at a Bitcoin meetup.
I downloaded a wallet app to store my bitcoins on my phone. Weisfeld used the QR code from my app to send me $0.25 worth of bitcoin. The money showed up in my digital wallet two minutes later.
That’s Bitcoin- internet money you can send to anybody, for any reason, at any time.
Coming Soon to Houston
The Texas Alcoholic Beverage Commission report clears one of the last legal hurdles between Bitcoin and the public. Now it’s just a matter of convincing bars and restaurants to adopt it.
“For merchants it’s a no-brainer,” said crytocurrency evangelist Kevin Moore. “You don’t have to worry about any type of fraudulent charge; you don’t have to worry about chargebacks.”
Weisfeld hopes more merchants will accept Bitcoin as an alternate form of payment to dollars. His company, Coin Vault ATM, operates bitcoin-powered ATMs. You can put money into them to get bitcoins or cash out your bitcoins for dollars.
“Austin was our first market we launched in March,” Weisfeld said. “We’re now aggressively seeking retail installation points where we can install the terminals.”
Everybody I talked to in the meeting hopes that Bitcoin will catch on in Houston like it has in other cities.
“Houston’s dragging way behind compared to Austin, Dallas,” Moore said. “Houston has 15-17 merchants right now that are accepting [Bitcoin].” (See CoinMap for a map of Bitcoin-enabled merchants)
“If you have any sort of city pride, that’s absolutely disappointing.”
Why Bother With This?
“People use Bitcoin for a variety of reasons,” said Caleb Chen, editor of Bitcoin news site Cryptocoins News. “Some people have the completely political agenda. Some people have purely monetary agendas, but largely it’s because they’ve lost faith in centralized money.”
Quick note for non-economists: dollars are centralized money because they’re run by a central bank. Bitcoin doesn’t use a central bank of any kind.
“Decentralized money offers a lot of different benefits depending on who wants it,” Chen told me. “You can provide anonymity, less fees, stuff like that.”
Buy anything online and you pay a small percentage to your bank, to PayPal, or to the credit card company. With Bitcoin, there are no fees. Nobody charges you extra. There is also no one to prevent you from spending money on something. Remember when PayPal blocked donations to WikiLeaks?
The lack of oversight and its digital-only nature makes it a favorite currency for buying anonymously online. The recently shut down drug website Silk Road ran on Bitcoin.
There are legitimate uses for Bitcoin as well. Chen explained that inflation-prone developing nations could use the internet money as an alternate, more stable currency.
Bitcoin still needs work, as cool as it is. The biggest issue with it right now is the price. The price of one bitcoin in dollars has been on one long roller coaster. It rocketed past $1,000, dropped to $600, went back up to $1,000, and dropped to $800-900.
That was within a span of two months. Bitcoin prices are crazy.
“Until we actually have a significant amount of users using Bitcoin, the volatility is going to happen,” Moore said. “If more people want to get into it, it’s gonna go up. If people want to get out, it’s gonna go down, and we’re gonna lose it all.”
Edit: Out of context, this quote makes it seem like Moore is more worried than he is. He clarified that he still sees this as something that will stabilize with more people.
Bitcoin is not for beginners. Even its most enthusiastic proponents recommend careful research before investing.
When I asked Chen what he would tell someone looking to get into Bitcoin, he said, “Read more, always read more. There’s always more to learn that will help.”
Everyone at the meeting seemed excited about the Bitcoin, even against the backdrop of financial instability.
“It’s a great experiment,” Moore said. “It’s just like watching the internet come to fruition, and that’s what drives me to be a part of this stuff.”
(Updated to clarify Moore’s quote and fix error. CoinVault ATM operates machines, it doesn’t make them).
by Kyle Nazario